Expro Group Holdings N.V.

please press star one on your telephone keypad. I'd like to hand over to Chad Stevenson, Director, Investor Relations. Please go ahead.

Welcome to Expro's first quarter 2025 conference call. I'm joined today by Expro's CEO, Mike Jarden, and Expro's CFO, Quinn Fanning. First, Mike and Quinn will have some prepared remarks. Then we will open it up for questions. We have an accompanying presentation on our first quarter results that is posted on the Expro website, expro.com, under the Investors section. In addition, supplemental financial information for the first quarter results is downloadable on the Expro website, likewise, under the Investors section. I'd like to remind everybody that some of today's comments may refer to or contain forward-looking statements. Such remarks are subject to risks and uncertainties that could cause actual results to differ materially from those results expressed or implied by such statements. Such statements speak only as of today's date, and the company assumes no responsibility to update forward-looking statements as of any future date. The company has included in its SEC filings cautionary language identifying important factors that could cause actual results to be materially different from those set forth in any forward-looking statements. A more complete discussion of these risks is included in the company's SEC filings which may be accessed on the SE's website, sec.gov, or our website, again, at expro.com. Please note that any non-GAAP financial measures discussed during this call are defined and reconciled to the most directly comparable GAAP financial measure in our first quarter 2025 earnings release, which can also be found on our website. With that, I'd like to turn the call over to Mike.

Good morning. Good afternoon, everyone. I'd like to start off by reviewing the first quarter 2025 financial results as summarized in today's earnings press release. I will then discuss what I would characterize as a dynamic operating environment, which despite our expectation that upstream investment will likely moderate in the near term, we believe supports a positive multi-year outlook for energy services companies like Expro that have a material exposure to the international and offshore markets. Quinn will supplement my commentary on the first quarter and outlook and share some additional financial information. For a recap of consolidated results and quarterly results by region, I'll direct you to slides two through nine of the presentation we've posted to our website, expro.com. On slide two, EXPRO's Q1 2025 revenue was 391 million with an adjusted EBITDA of 76 million or 20% revenue. This marks our highest first quarter performance in adjusted EBITDA and margin since merging with Franks in October 2021, continuing a multi-year trend of margin improvement. Our performance demonstrates robustness of our business model, the benefits of having a comprehensive portfolio of services and solutions, and a global presence, but modest exposure to markets such as U.S. land, Mexico, and offshore Saudi that are expected to contract in 2025. Organic investment and a successful M&A strategy continue to enable margin expansion, improve relevancy to our customers, and better position a company for 2025 and beyond. In sum, we believe Expro is well prepared to handle expected market volatility and create long-term value for stakeholders. In terms of commercial activity, we secured $272 million in new contract awards in the first quarter. Safety, service delivery, and cost-effective technology-enabled services and solutions have all contributed to these successes, which have included contracts across the lifecycle of the well. More specifically, we had contract awards in the U.S. covering well construction services valued at approximately $50 million, in Brazil for drilling and completions, work over and abandonment services valued at more than $30 million, and in Indonesia for electric line and slick line services valued at approximately $15 million. Our backlog at approximately $2.2 billion at the end of the first quarter remains both healthy and in line with expectations given the typical seasonal patterns of contract awards. Turning to the macro outlook, following the conclusion of the first quarter, tariff announcements and a pull forward of production increases by OPEC Plus introduced significant near-term uncertainty and volatility across the global oil markets. Fears of a tariff-induced global trade war have lowered macroeconomic visibility and GDP growth expectations. Consequently, there is no clear near-term path for global liquids demand, which before Liberation Day had been rising. Despite changing trade policies, a modestly oversupplied oil market, and evolving economic conditions, the long-term outlook for the international onshore and offshore markets, to which EXPRA is most levered, remains very positive. Regarding long-term demand, Natural gas will be a critical clean fuel to meet global energy needs with tailwinds stemming from AI, data center, and digital infrastructure related demand and from energy security considerations, particularly in Europe. This is why LNG is in the midst of a major expansion phase. Similarly, liquids demand is expected to remain above 100 million barrels per day throughout at least 2030, and more than half of that daily demand will be met with barrels from fields that have not yet been developed. Regarding long-term supply, as Veritan highlighted in its recent Super Spike newsletter, U.S. shale oil, which has been the overarching engine of oil supply growth over the past decade, is showing signs of maturation, with a growing list of companies contemplating plans for what comes after U.S. oil shale. We believe operators will increasingly focus on offshore activities. This shift is due to the accessibility of deep water barrels, which also offer cost and carbon advantages. After a decade of restrained upstream investment, we remain bullish on the business over the longer term. However, the energy services industry is also navigating global economic uncertainty and supply, demand, and balances, the collective effect of which has been weaker and more volatile commodity prices. Until prices stabilize, customers will likely remain cautious with discretionary spending and new project sanctioning. In our view, current macro conditions are influenced more by global trade issues and geopolitics than the energy industry fundamentals, which remain very strong. Meanwhile, volatility has increased across commodities, equities, and other markets, and we expect this to persist until there's better clarity on the macro outlook. While policy choice may ultimately lead to a global recession, a more likely scenario is that sector weakness will reverse once trade policies are clarified and other macro indicators improve, similar to the recovery scene after the 90-day pause on planned tariffs. In this context, according to the U.S. Energy Information Administration, global oil consumption is forecast to increase by 0.9 million barrels per day in 2025, with demand reaching an average of 103.6 million barrels per day. A further increase of 1.1 million barrels per day is anticipated in 2026. In short, despite softer near-term growth, demand is expected to remain resilient, supporting a long-term upcycle for the energy sector. A potentially protracted trade war between the US and China, however, would pose a risk to China's long-term oil demand. On the supply side, the EIA projects global liquids production to grow by 1.3 million barrels per day in 2025, reaching 104.1 million barrels per day, led by non-OPEC Plus producers, including the United States, Canada, Brazil, and Guyana. Further growth of 1.2 million barrels per day is forecast for 2026. That said, supply risk remains high due to the uncertainty surrounding the sustainability of sanctions on Russia, Iran, and Venezuelan exports. While the EIA currently forecasts average brick prices of $68 per barrel in 2025 and $61 per barrel in 2026, oil prices are expected to remain volatile in the near term as markets digest new tariff policies, geopolitical tensions, and sanctions. Despite downside risk, commodity prices are expected to remain at levels that will support continued upstream investment, with most international and offshore operators maintaining good profitability above that $60 to $65 per barrel range. This should provide a constructive environment for continued activity across EXPRO's largest product lines. If a more constructive macro backdrop develops over the next several quarters, we continue to believe that 2025 will be a transition year with a return to a healthy level of sanctioning activity in 2026 and beyond to meet long-term demand for oil and gas. Offshore project sanctioning continue to gain momentum with about two-thirds of greenfield capex over the next two years expected to be allocated to offshore developments again these projects benefit from lower emissions intensity and have competitive break-evens and are a natural fit for express core strengths compared to our q4 earnings call outlook this indicates a delay in activity yet maintains a positive multi-year perspective both on the overall opportunity set and expo's relative market position Years of industry-wide capital discipline have prepared operators to continue development activities through a more volatile near-term market scenario, and as such, upstream investment is expected through 2025, with several geomarkets likely proving to be more resilient than the equity markets currently seem to believe. In our NLA region, activity should be stable in Brazil and Guyana as a result of the development plans emanating from the high volume of FIDs in recent years, as well as in Argentina and Colombia, because of an abundance of oil and gas resources and pro-growth policies. Similarly, in ESA, the outlook is constructive for Norway and parts of West Africa. In the Middle East and North Africa, we are expecting stability in our two largest markets, which are Saudi and Algeria. In Saudi, our business is more levered to onshore unconventional gas, more so than offshore oil. In Algeria, our business is levered to production optimization, more so than new development activity. In Asia Pacific, we were expecting a 2025 slowdown offshore Australia prior to April 2 due to the timing of projects. But markets such as Brunei and India should have a post-monsoon season rebound in the second quarter of 2025. And we have new activity commencing in both Indonesia and Vietnam. In addition to the anticipated contractions in U.S. land, Mexico and offshore Saudi that I mentioned earlier, A prolonged trade war and weaker commodity prices could result in reduced activity in the Gulf of America, which historically responds relatively quickly to changes in commodity prices and is an important market for expo. Overall, it is expected that customers' 2025 work programs will be largely unaffected by short-term commodity price movements and market uncertainty. However, non-committed expiration appraisal wells and the final investment decision approvals may be delayed as customers reevaluate project economics in light of current conditions. Consequently, the approval of offshore projects in areas such as West Africa may be postponed to 2026 or even early 2027. If expected project approval slides to the right, the 2026 activity outlook may be impacted, but we believe this will also extend the upcycle given the reduced spending levels over the last 10 years. If development activity slows, customers will continue to focus on improving efficiency and reducing the carbon intensity of their operations, resulting in increased brownfield activity and sustained OpEx spending. While Expro is currently more levered to drilling and completions activity, the company's well intervention and integrity, production optimization, and digital solutions businesses should remain resilient. With a more uncertain backdrop, We remain focused on maintaining costs and capital discipline and otherwise controlling what we can control. We will continue to execute our strategy and offer differentiated services and solutions to our customers. We will also size the business based on revenue realities, and we will adjust CapEx spend on the projects that customers sanction and the business that is awarded to ExPro. In addition, our zero net debt balance sheet also provides a company with strategic and financial flexibility. Operational performance has been strong, and we have a head start on cost optimization with our Drive 25 efficiency campaign that we launched several quarters ago. This should help us protect margins if activity softens and allow us to improve margins if activity stabilizes or improves. Again, on a relative basis, we are less exposed to the markets most likely to contract in 2025, including the lower 48, Mexico, and offshore Saudi. Regarding our ability to offer differentiated services and solutions, We continue to provide cost-effective technology to the markets as evidenced by several of the contract awards that we highlighted in our press release. In the Gulf of America, we've remained a market leader in well construction by investing in technologies that enable operating efficiencies and cost savings, improve safety outcomes by removing personnel from the red zone, and enhance well integrity through more reliable tubular connections, most recently securing a three-year tubular running services contract over four rigs. The contract for approximately $50 million integrates our most advanced digital technology, including Centrify and iCAM. PRT Offshore, which we acquired in 2023, continues to perform well, highlighting how Expro has opportunistically used M&A to complement organic investments in the business. In the first quarter, the PRT team simultaneously executed operations for seven subsea customers in the Gulf of America. The team is also leveraging EXPRO's global operating footprint to improve asset utilization and increase revenue, having secured new awards for surface handling equipment in Asia Pacific and Sub-Saharan Africa. In ESA, we successfully completed the system integration of our open water intervention riser system, the first of its kind to be built by EXPRO. The equipment was delivered under a six-year contract and is currently mobilized for the deployment in the UK sector of the North Sea. The current campaign is abandonment, but EXPRO's open water IRS solution ensures safe and reliable subsea well access and can be used across development, intervention, and abandonment, ultimately unlocking production gains while minimizing operational costs. In the Eastern Mediterranean, we continue to see robust momentum and have successfully completed deepwater well construction operations for two major clients for TRS services across two exploration wells. Within the MENA region, our QPulse technology was successfully piloted in the Jafura field in Saudi, demonstrating excellent correlation in multi-phase flow data across three phases compared to the traditional test separator. The success allows the technology to be used for production testing as a standalone technology, eliminating the need for a conventional separator. This non-intrusive solution offers rapid, cost-efficient data essential for field production allocation and well-performance monitoring. In Asia Pacific, we successfully deployed our Centrify consolidated control console for a major international oil company in Indonesia, marking its maiden international deployment. We are seeing an increased demand for the market for our Centrify systems, reflecting the value and efficiency they bring to our clients' operations. This system exemplifies our commitment to automation and operational excellence. Also in Indonesia, we secured a three-year contract for well intervention services across 315 wells. Before I hand over to Quinn, I'll comment on the guidance for the second quarter and full year 2025 that was included in our earnings press release. For Q2, assuming no additional tariff-driven uncertainty and that commodity prices were made at or near current levels, we expect a seasonal rebound in Europe and a return to normal operations cadence in Asia Pacific after an extended monsoon season. with low to mid single-digit sequential revenue growth overall and modest quarter-over-quarter adjusted EBITDA margin expansion. Q2 revenue will be down on a year-over-year basis due to a non-repeat of sub-C projects delivered in the second quarter of 2024. We currently expect at least mid single-digit revenue growth in the second half of the year compared to the first half of the year, largely supported by the scheduled startup of new projects. For full year 2025, With the same tariff and commodity price caveats, we expect revenue to be generally flat relative to 2024 and that margins will be stable, if not up modestly, year over year due to activity mix and operating efficiency gains. For now, we remain comfortable that full-year revenue will exceed $1.7 billion. We also expect adjusted EBITDA for the full year will meet or exceed 2024 results. But clearly, visibility is less precise today given the uncertain macroeconomic and geopolitical backdrop. While there is currently a lot of uncertainty in the market, we have experienced extended down cycles as well as transient troughs and activity in the past. The current market feels more like a transient trough to me, and in retrospect, 2025 will be a better year than many investors currently assume, but only time will tell. Our business is more leveraged to long cycle rather than short cycle development, so we should be somewhat insulated from short-term movements and commodity prices. Nonetheless, we will quickly adjust our costs and capital expenditures as market conditions warrant. We are also in a good position with the balance sheet that we have, the quality of the customers that we support, and the geomarkets to which we are more exposed. Importantly, we are focusing on profitability and cash generation more than growth. With that, I'll hand the call over to Quinn to further discuss our financial results.

Thank you, Mike. Good morning to everyone on the call. As Mike noted, we reported revenue of $391 million for the quarter ended March 31st. As compared to the guidance range for Q1 2025, revenue of $370 to $380 million that was provided on our Q4 earnings conference call. As anticipated, revenue was down $46 million, or about 11% relative to the fourth quarter of 2024. Reflecting a combination of the winter season in the northern hemisphere, and the non-repeat of large subsidy projects in the fourth quarter of 2024. Year over year, revenue was up $7 million or approximately 2% relative to the first quarter of 2024. As Mike noted, Q1 2025 was the best first quarter performance since we completed the Expo Franks merger. Adjusted EBITDA for the first quarter of 2025 was $76 million as compared to Q1 guidance of $65 to $75 million. representing a sequential decrease of approximately $24 million or 24% relative to the fourth quarter of 2024. Compared to Q1 2024, adjusted EBITDA increased $9 million or 13%. Adjusted EBITDA margin for the first quarter was 20% and was down about 300 basis points quarter over quarter. As compared to Q1 2024, adjusted EBITDA margin increased about 200 basis points. Turning to regional results, for North and Latin America, or NLA, fourth quarter revenue was $134 million, or down $5 million quarter over quarter, reflecting lower activity in well construction and well flow management, while subsea well access activity was higher in the US, and well intervention and integrity was higher in Argentina. NLA segment EBITDA margin improved 23% from 22% in Q4 2024. reflecting an increase in subsea activity and resulting favorable activity mix in the region. Note that revenue generated from the U.S. land and Mexico markets was about 4% and 1% of consolidated 2024 revenue, respectively, and continues to be a small part of the Global Expo business. For Europe and Sub-Saharan Africa, or ESA, first quarter revenue was $112 million, a sequential decrease of $30 million or 21%, primarily driven by a non-repeat of Q4 subsea projects in Angola, partially offset by increased production solutions revenue in the Congo. Segment EBITDA margin at 26% was down 11 percentage points sequentially, reflecting a decrease in high margin subsea activity. The Middle East and North Africa, or MENA team, delivered another excellent quarter. Q1 revenue in MENA was $94 million, or up 1% sequentially. Mike SanClements, driven by higher well intervention integrity revenue in Qatar higher production solutions revenue in Algeria and higher revenue from the acquired core tracks business, which is largely captured within well construction partially offset by lower low construction revenue in Egypt. Mike SanClements, Mina segment EBITDA margin at 37% was up 1% quarter of a quarter and up approximately 220 basis points year over year. Finally, in Asia Pacific, or APAC, first quarter revenue was $51 million, a decrease of $12 million relative to the December quarter, primarily reflecting the expected decrease in subsea well access activity offshore Australia and lower well flow management, well construction activity in Brunei and Malaysia, partially offset by increased core tract activity onshore Australia, which in this case is captured within the well intervention integrity product line. Asia Pacific segment EBITDA margin at 21% was down from the prior quarter, reflecting mix, was up about 340 basis points compared to Q1 2024. Total support costs for Q1 2025 were $85 million compared to $88 million in Q4. Support costs as a percentage of revenue was approximately 22% compared to approximately 20% in Q4 due to sequentially lower revenue. Corporate G&A is a subset of total support costs. It was approximately 3.9% of revenue in Q1 2025. To provide an update on our Drive 25 initiative, we are well into the implementation phase of our cost optimization program. On our Q4 earnings conference call, we highlighted an initial target of $25 million in run rate support cost savings that would be achieved by the fourth quarter of 2025. This would allow us to establish a new baseline for support costs at around 19% of revenue and provides scope for improved operating leverage and further margin expansion with growth. We have now identified a bid over $30 million of run rate support cost savings, and where possible, we are looking to pull forward the realization of such savings. On our Q4 call, we indicated about 50% of the overall target would be reflected in 2025 results, and we are planning to capture not less than 50% of the higher run rate target during the current year. Turning to liquidity, first quarter adjusted cash flow from operations, which excludes cash paid for interest net, cash paid for severance and other expense, and cash paid for merger and integration expense, was $53 million, a year-over-year increase of $14 million. During Q1 2025, working capital decreased $2 million quarter-over-quarter, and cash taxes were approximately $15 million. Additionally, cash conversion or adjusted cash flow from operations as a percentage of adjusted EBITDA was 69%. Adjusted EBITDA less capital expenditures was approximately $43 million and free cash flow or adjusted cash flow from operations less capex was approximately $20 million. Non-operating uses of cash included capital expenditures of $33 million and $10 million to the repurchase of 1 million EXPRO shares at an average price per share of $10.08. Acquired shares were approximately 1% of total shares outstanding. Following the Q1 stock repurchases, approximately $66 million was available under our current $100 million program. We still intend to use about one-third of our annual free cash flow to acquire ExPro shares. ExPro had total available liquidity at the end of Q1 of approximately $315 million. With cash and cash equivalents including restricted cash, of approximately $180 million and availability under our revolving credit facility of approximately $135 million. Turning to our outlook, page nine of our accompanying slide summarizes our guidance for Q2 and for full year 2025. As Mike noted, we are currently expecting full year 2025 revenue to be comparable year on year and that adjusted EBITDA will meet or exceed 2024 results. Within a reasonable 2025 revenue range, free cash flow margin free cashless percentage of revenue should be in the seven percent area or approximately 120 million dollars as it relates to q2 we expect our results for the second quarter to reflect a moderate increase in activity across nla issa and apac while mean is expected to be relatively stable quarter over quarter we currently expect q2 revenue of 400 million dollars to 410 million dollars or up about four percent sequentially based on the midpoint of guidance Based on Q2 adjusted EBITDA guidance of $80 to $90 million, Q2 2025 adjusted EBITDA margin is expected to be up sequentially and year-over-year by about 100 basis points. We continue to expect a further uptick in H2 based on planned project startups, including in Mexico and on the U.S. side of the Gulf of America, where we expect a pickup in drilling activity following a completions-heavy first half of the year. This should benefit the TRS cementing technologies businesses within well construction. We also plan to commence work on new contracts that were awarded in Q4 and Q1 in several countries in both NLA and APAC. As discussed, there is an element of market uncertainty created by tariff announcements, additional OPEC Plus supply, and a variety of geopolitical issues that will inform customer activity in 2025. However, this will likely not be settled until the second half of the year. We expect the demand for our services to continue with line of sight on projects in Q2, particularly international and offshore markets. As the year progresses and more clarity is provided by the operators, we'll have more visibility on project timing for the second half of the year and the medium term activity set. We are currently planning to deliver 2025 financial results within our original guidance ranges based on our understanding of customer work plans But we acknowledge such work plans may continue to evolve throughout the year. As I've highlighted, we are already taking action to optimize costs and streamline processes through our Drive 25 operating efficiency campaign. If operators' plans change, we will adjust costs and capex accordingly to preserve margins and generate cash. With that, I'll turn the call back to Mike for a few closing comments.

Thank you, Quinn. As we evaluate the business, we believe Extra is positioned well with leading positions in our core product lines and good exposure to markets that will support the underlying activity for a multi-year growth cycle. Our organic investments allow us to maintain our position at the forefront of the energy services industry as we continue to evolve and expand our portfolio of differentiated solutions while maintaining our high service quality. Our M&A strategy has facilitated accretive growth and allowed us to acquire and integrate high-quality businesses with excellent margins and to acquire high-quality talent and integrate business builders into the Expro global platform. We continue to believe the macro backdrop sets up 2025 to be a transition year for the energy services industry. As such, while we expect Expro's top-line revenue to be relatively flat compared to 2024, improved activity mix and operating efficiency gains should translate into margins at or above 2024 levels. The current geopolitical and oil supply disruptions have introduced market uncertainty, and we will navigate the international and offshore markets as the year progresses. Beyond 2025, we remain very bullish on the outlook for long-cycle development driven by economic growth, security of supply considerations, and policymakers accepting that hydrocarbons, and particularly natural gas, will remain a key element of the global energy slate for the foreseeable future. Expro is poised for long-term growth, success, and value creation. With that, we can open up the call for questions.

Thank you. If you would like to ask a question, please press star followed by one on your telephone keypad. If you would like to withdraw your question, please press star followed by two. When preparing to ask a question, please ensure your device is unmuted locally. First question comes from Arun Jayaram with JP Morgan. Your line is open. Please go ahead.

Yeah, good morning, gentlemen. Mike, I was wondering if you could elaborate on what you're seeing kind of in the MENA geographical segment. Seems to be a really strong growth here. Thoughts on maybe the sustainability of the the margins that you clip, the 37% margin, and maybe talk a little bit about the contribution you're seeing from Cortrax.

Sure. Good morning, Aaron, and great question. Thanks for joining. I guess it's, you know, one of the, and for myself, having lived and worked in the Middle East earlier in my career, it's, you know, it typically is, the good thing about the operators there, our customers there, the NOCs, they tend to be They're more like an aircraft carrier. When they make adjustments and changes, it takes a while for them to start to course correct. So it tends to be more stable for a longer period of time. We have really, really strong anchor contracts in Saudi and in Algeria in particular. And we've had great market penetration with core tracks in particular in Saudi. Most of our activity in Saudi is really focused around land unconventional gas. And we've actually observed a rig count increase in unconventional gas last year, and we'll continue to see some this year. So we continue to see some real strength there. And it's part of the reason why we continue to invest both in our own engineering efforts, but also some of the things we've done with our recently acquired bolt-on acquisitions just allows us to continue to provide services and solutions to our customers that drive efficiency or help them you know, reduce the number of days drilling or increase the speed of completion, those type things. So MENA continues to be a real strong growth engine for us. And generally, I believe we'll continue to be more stable here over the, certainly over the short term and medium term and long term as well.

Great. And just Cortrax?

I mean, Cortrax specifically, we continue to... I continue to be really pleased at how the integration has went, how we're getting market penetration, you know, both in the Middle East, but also in other jurisdictions. We didn't highlight it here in today's call, but we're having some really good, you know, market activity in Australia in particular for expandable services from Portrax. It really allows us to go into You know, coal bed methane wells, reline those wells where they've had, you know, corrosion issues and put a large number of wells back onto production. So it's been a great acquisition for us, really, really strong team. And the challenge for us is to make sure that we, you know, don't try to expand from, you know, eight or 10 countries that we were, that Cortrax was offering in initially, that we don't try to run too quickly and move it into all 60 countries the broader expo is. So we're trying to be very methodical, but I've been extremely pleased with the technology, the team, the customer feedback has been great with CoreTracks.

Great. Maybe my follow-up, Mike, just thinking about the depressed valuation of the equity, you got a net cash balance sheet, your guidance would imply probably $200 million plus of free cash flow this year, so you're trading at over 20% free cash flow, at least on our math. How are you, Quinn, the rest of management, thinking about buybacks in this kind of environment, and how do you characterize buybacks versus some of the appeal of buybacks versus other kind of call it inorganic opportunities that you see in the marketplace today?

Sure. It's a great question. Just to clarify, what we tried to say in the call was a free cash flow margin of about $120 million this year, circa 7%. So I'll just pause with that on your comment around the $200 million number. But I think more importantly, yes, we are trading as many and all of our peers are trading at depressed values today. We continue to We've got some headroom available in our existing share repurchase authorization. And we look at all the capital across. We look at how it competes, whether it's CapEx or it's share repurchases or those type of things. We look at that, and I think it's a good opportunity for us to continue to lean into that here as we continue in 2025 with this kind of continued market choppiness, so to speak.

Maybe just a bit of definitions here, Arun, but we do expect something north of $200 million in adjusted cash flow from operations, but net of capex would be the previous numbers that we provided.

Okay, sounds good. I was just looking at the EBITDA taking out capex and a little bit of income tax, but we can follow up offline, but thanks a lot, Quinn. Thanks, Arun.

Thanks, Arun.

We now turn to Ati Modak with Goldman Sachs. Your line is open. Please go ahead.

Ati Modak Hi. Good morning, team. Mike, you kind of gave us a second half versus first half expectation. That was very helpful. Can you talk to us about what factors you are watching as you think about the full year guide and the revision there, and anything you can share in terms of the sensitivity that you are thinking of to help us understand the potential outcomes?

No, and again, thanks for joining. I think it's a really relevant question. It's, you know, we have had a really over the course of the last, in particular, the last, I guess, 28 days since the 2nd of April, we've had a tremendous level of engagement with our customers, you know, globally to go back and kind of look at, you know, projects and activity and kind of how they see things playing out the rest of the year. And what we've tried to highlight is our best, you know, the best information we have from our customer engagements. And I guess how I would, you know, kind of characterize those today is they're cautious, especially for the projects that have already been sanctioned. You know, they're going to continue moving those projects forward. We're not seeing, you know, or having any discussions about projects stopping or activities stopping or those kind of things. So we've kind of gone through a bottoms-up effort to look at that activity set for the rest of the year. And I think there's just a little bit of a wait-and-see kind of mentality from our customers. I think more robustly, if you look at, you know, just look at the commentary from the subsea tree guys about orders and backlog and all those type things. Our operators and our customers, they're not going out and buying expensive trees and putting them on a shelf because they just want to spend dollars unnecessarily. I think they're preparing themselves for activity that's going to happen in the medium term. So we continue to see that level of activity and that's what we've tried to give guidance to with you guys is kind of how we're seeing things lay out from a global standpoint. We tried to highlight a couple of the markets in a couple of the countries where they seem to have some, maybe they're going to have some more softness, you know, i.e. Mexico, especially the Pemex activity in Mexico. So that's really kind of what we were trying to steer towards.

That's very helpful. And then you kind of talked about MENA and you just mentioned Mexico, but do you mind elaborating on the other geographies as you see activity expectations, anything that you would want to point out and highlight? And then maybe give us the perspective on how you think about the well management and well construction businesses as you walk through that.

Sure. I guess probably a couple that I would highlight is, you know, I think that Latin America is going to have, you know, it's going to be such a tremendous, you know, platform for strong activity and strong growth. We tried to highlight, you know, obviously Guyana is strong, you know, James Forrest, Norcal PTACC, medium term we'll see some Suriname type type activity those type things Brazil continues to be robust with you know Petrobras and even some of the rig rig rig contracting at Petrobras is having conversations around. James Forrest, Norcal PTACC, we're really we're really positive on Argentina it's a much more positive and constructive climate in Argentina today than what it has been over the course of last several years. You know, inflation is more stable, more stable when it comes to the unions and those type things. And, you know, I certainly believe that that's going to give some stability within the country. So Latin America, I think, will continue to be strong. Middle East, we commented earlier, it's always going to be, you know, more resilient than others. You know, Europe is still going to be somewhat suppressed with the UK sector of the North Sea, but I think Norway will have some strong activity. And across Asia Pacific, we highlighted in the previous call and kind of reiterated today that we continue to believe Australia is just because of the timing of some of their projects and those type things, we were already anticipating some softness in Australia in 2025. And I don't think that's been affected at all by what's happened since Liberation Day. So I think there's just some good, strong levels of activity that can have some strong service related We did highlight with Mexico, I think the P-MEX activity for Mexico, you've heard from some talk about down 50 to 60% year on year. We don't have a massive amount of exposure in Mexico overall, but what we're starting to see here right now is non-P-MEX related activity. Just some of the market share we have, we're seeing some strong activity here in the second half of the year. That gives you a little bit of a walk across my views on it kind of geographically.

That's super helpful. Thank you.

Good to speak. Thank you for the questions.

We now turn to Eddie Kim with Barclays. Your line is open. Please go ahead.

Hey, good morning. Just wanted to stay on the theme of recent customer conversations. You mentioned in your release that you're waiting For more clarity around timing of offshore FIDs and in your remarks, you highlighted West Africa as one of the regions you expect projects could get pushed out. So just curious if you're actually hearing from your customers and getting early indications that project FIDs are likely to get pushed out or if this is more what you expect will happen just based on recent market volatility. Any color there would be great.

No, and any good to good to speak. I guess what I would. This is not from our customers saying, hey, we're going to slow down FID sanctioning. This is just more our interpretation of the tea leaves, so to speak. And let's keep in mind that the 2025 activity that's ongoing today is from already pre approved, you know, sanctioned FIDs. They've already moved into operational phases, so this is just more kind of. of an anticipation of, given some of the caution from our customers, they may very well delay awarding FIDs here for some period of time. So it's more of an anticipation than it is from any specific data points. But if I've learned nothing over my 30-plus years in the industry, sometimes I try to rely on what the history has been to try to predict how we think things are going to be in the future. So that's as much of it as anything, Eddie.

Understood. Understood. Thanks for that clarification. My follow-up is just on the potential tariffs impact on your business. I realize it's very early days and the situation seems to change by the day, but if the current tariff regime during this 90-day pause period holds, do you have an estimate or a range on what type of EBITDA impact we should expect on your business this year? And it sounded like This would already be reflected in your guidance for the full year, and that if the tariff situation gets worse, it could represent further downside, but if you could confirm that also, that would be great.

Quinn, you want to address that one? I can take that, Eddie. I guess consistent with some of our peers' comments, I think it's fair to say that the evolving landscape makes precise estimates of the impact of U.S. tariffs, both in operations and financial results, somewhat challenging. But I guess generally we would be less impacted by tariffs than other companies because we're primarily a services company rather than a manufacturer. And I guess also 80% of our revenue is derived from activities outside of the United States. Those are probably two important context points. Nevertheless, Steve Russell, our chief technology officer, and his team have recently made an initial assessment of U.S. tariffs highlighting two primary elements of the business that could result in higher costs. Number one, we do import large OD pipe as a production input to our two-grid products business. Domestic sales for that product line would clearly attract U.S. tariffs. However, pipe that's imported and we add value to is then ultimately re-exported is generally not subject to U.S. tariffs because we work through free trade zones and free trade zone regulations would exempt that activity. We do import a bit of equipment. and upgrade it that is not going to ultimately have free trade exemptions. We also import a small amount of services equipment that may be subject to tariffs. So I guess the bottom line is our current view is that the potential impact of U.S. tariffs will likely affect activity more so than higher costs for expo. At least our preliminary estimate based on the current announcements will probably have something less than a $5 million impact of U.S. tariffs. some of which could obviously be impacted by supply chain adjustments, and some of which could be recovered from customers either through existing contract terms, contract adjustments, or ultimately price increases. So at least based on our current assessment, we don't think it's going to be a material driver to results for 2025. Okay.

Got it. Thanks for that very helpful color. Thank you. I'll turn it back. Thank you.

As a reminder, if you'd like to ask a question, please press star one on your telephone keypad now. Now turn to Blake McLean with Daniel Energy Partners. Your line is open. Please go ahead.

Hey, good morning. Thank you all for taking my call.

Absolutely. Thanks for joining.

Yep. So, look, you guys highlighted automation and safety as driving a number of the recent contract awards. And I'm just wondering, are products like Centrify, where you remove people from the rig floor, are they just less impacted by some of this volatility because of the safety component? And maybe just talk about the runway for that product and for products like that today versus where current market penetration might be.

No, it's a really good question, and I guess how I would characterize it is, you know, technologies like Centrify and ITONG, it really allows us to do two things. Number one, the personnel you do have on the rig floor, you know, there's less amount of time if they have hands-on pipe or they're in the red zone, so you'd massively reduce the opportunity for there to be an HSE incident, which is very critical, and red zone management is something that's very, very important to especially to our big IOC customers. This is something they're very, very focused on, and so this is a technology that's really helpful for that. But secondarily, it allows us to reduce the number of personnel that we actually have to place on the rig floor. So from our cost standpoint, it reduces the number of personnel, allows us to cover more rigs with the same headcount. So it's really kind of – it allows us to kind of have that kind of multiplicative effect of – of technology improving safety and also for us to kind of repurpose our personnel and frankly it's been one of those where we're going to introduce it at a at an appropriate rate because we have expectations around what kind of revenues and what kind of value we add to those operations so we're going to introduce those technologies and make sure that we're sharing in the benefit and sharing in the value with our customers as well as we are because you know we invested heavily in those type technologies you know, throughout the pandemic and those types of things. So that's when we're really trying to get to it and really using, you know, machine learning automation, those types of things, not only as a differentiator, but, you know, also as a way for us to make operations safer and more repeatable. All of a sudden now you're, you're torquing up to a fixed torque every time you're recording it and you're not relying on somebody on the rig floor who's literally Rich D' Historically was going by sound or going by feel as you're talking up connections we've now kind of moved beyond that so it's been a tremendous advancement from from an operational standpoint.

Rich D' Good that's helpful Thank you I guess my my next question, I would, I would ask you guys a little bit about the m&a market, I mean you guys have been active there and grown. through M&A, I think you characterized it as a dynamic operating environment, which I thought was great. Is that volatility bringing people to the table? Is it pushing people away due to movements and bid-ask spreads? So any color you could give on the M&A market today and what that looks like for you all.

Yeah, no, Blake, that's a hard one to... That's a hard one for me to quantify. What I can tell you is we continue to work really hard on things that we believe will fit well under the X-Pro umbrella that will help us be more relevant to our customers, help us generate accretive margins and accretive cash generation, those type things. We continue to look at them and there's still opportunities out there. You know, it just depends on, you have to have some patience with these kind of things. You know, several of the recent acquisitions that we completed, you know, those were multi-year endeavors. It was two years in the process from the time that we started it to we actually closed them. So we still have opportunities. We still have things we want to go out and do. And, you know, how successful we can be in getting those closed, only time will tell. But I think we've demonstrated that we're a good platform. We're a good portfolio to bring those things into. and you know we start looking at some of the smaller type acquisitions one of the key elements is you know we've had a really really good ability to retain the management and the operational teams from the acquisitions we've made we've got a good platform and I think we have a you know pretty good approach when it comes to integration those kind of things I think it's a good home and a good destination and we'll continue to work hard on those and I still believe we'll be able to consummate some other bolt-ons. What that looks like and when we'll get them done is a little bit to be determined, but we're still working hard on those kind of things.

I think the only thing I would supplement, Blake, is the current balance sheet does give us some flexibility. We think we can do bolt-on M&A as well as acquire shares so we can walk and chew gum at the same time. Scale also probably gives us some broader alternative sets in terms of funding alternatives. So we have balance sheet capacity to take on a bit of leverage. But as Mike has said on a number of occasions in the past, M&A is going to be evaluated relative to where expo trades, investor capital, where we think it will have the most impact. But we can do both.

Understood. Thanks very much for the call, y'all.

Great. Thank you for this.

Ladies and gentlemen, we have no further questions. So this concludes our Q&A and today's conference call. We'd like to thank you for your participation. You may now disconnect your lines.